To help pay for a new $139.79 million ballpark downtown, the city of Omaha, Neb. is looking to increase taxes on car rental, hotel rooms and keno, Omaha World-Herald reports.
The plan calls for a 1 percent increase in the city's hotel tax to generate $22.31 million over 20 years. The city tax per rental car would rise from $6 to $8. That would generate $9.66 million over 20 years.
Omaha is following a national trend of relying on taxes that fall mainly on out-of-towners to finance sports facilities.
However, business travelers make up a significant portion of the people who stay in hotel rooms and rent cars. Travel industry experts say Omaha-based corporations would foot the bill for a significant portion of that travel and would have to pay the higher taxes.
"Roughly half of all rental business is generated by local businesses," said Sean Busking, executive director of the American Car Rental Association, an industry group that opposes taxing rental cars to pay for sports facilities. "You're hurting your own businesses when they bring people into town."
One potential problem with relying on hotel and rental car taxes is that those revenue sources are vulnerable to recession, said Don Holecek, the former director of the Travel, Tourism and Recreation Resources Center at Michigan State University. Business travel is one of the first things that companies cut down on during a recession, he said.
Ebdon, the city finance director, agreed that a recession could have a negative impact on hotel and rental car tax revenues. But she said the financing plan includes modest revenue growth.
For rental cars, the growth in revenues is projected to be 2 percent a year. That's similar to what Omaha has experienced in recent years, she said.
According to Omaha World-Herald, the $139.79 million stadium project would be funded with a combination of public money, private donations and revenue generated by the stadium. Public money would be the largest source, at $59.24 million.